Chapter 13 Auditing Concepts

Chapter 13 – Auditing Sampling Concepts

The nature of Sampling

Audit Sampling occurs when (a) less then 100 percent of the items in the population under examination are being audited (b) each item in the population could be selected as part of the sample

* Sampling is tied to the auditors risk assessments

3 aspects of audit sampling

(1) Planning the sample and selecting the sample

(2) Preforming the tests

(3) Evaluating the results

Representative Samples

* When selecting a sample from a population the objective is to obtain one that is representative

* The characteristics in the sample are the same similar to the population

* to increase the representativeness of the sample the auditor can use care in design, selection and evaluation

* 2 things can cause a sample result to be non representative (1) non sampling error or non sampling risk (2) sampling error or sampling risk

* Non- Sampling Risk: occurs when audit tests do not uncover exptions exiting in the sample (1) failure to recognize exceptions (2) inappropriate or ineffective audit procedures.

* Sampling Risk: is an inherent part of sampling that results from testing less than the entire population. Even with zero non sampling error there is always a chance that a sample is not representative . To control sampling risk (1) increasing sample size will reduce the sampling risk (2) using an appropriate method of selecting sample items from the population.

Statistical Versus Non – Statistical Sampling

Similar: they both involve the same 3 steps (1) plan the sample and select the sample (2) Perform the tests and (3) evaluate the results

* the purpose of planning the sample is to make sure that the audit tests are preformed in a manner that provides the desired sampling risks and minimizes the likelihood of non sampling error.

Selecting: deciding how to select sample items from the population

Performing: tests involve examining documents and...